Australia has a large and diverse not-for-profit (NFP) landscape. In all, there are about 600,000 nonprofit organisations throughout the country. NFP groups need to maintain accurate financial records just like for-profit companies, and they often have unique complications. Nonprofits, for instance, are often responsible for mandatory audits and report to more governing bodies than for-profit businesses.
Having a bookkeeper on your side who is well-versed in NFP finances can be a real lifesaver. As an organisation that may not have a lot of money to spend, outsourcing your bookkeeping is probably the most cost efficient option. Outsourced bookkeeping for nonprofits allows you to tap into expertise without hiring a full-time accountant.
Read on to learn more about how outsourced bookkeeping for nonprofits can keep your organisation’s reports on track.
Save time to focus on your nonprofit’s mission
NFPs are bound by a variety of rules laid out by the Australian Charities and Not-for-profit Commission (ACNC). And that’s on top of the standard accounting needed to keep any organisation from going broke. Between daily accounting and payroll and annual reports — you could spend hours per month on your books.
Outsourcing your bookkeeping needs means your back office staff suddenly have more time for what matters: your organisation’s mission. If your executives are getting stressed out about filing their own reports, it’s time to call in some assistance. You can still receive and review your necessary reports without being responsible for creating them. This means staff are still knowledgeable about your financial position, they just don’t have to labour over the number crunching.
Minimize your nonprofit’s financial risk
Even a well-intentioned staff member can mismanage your money. And, some not-for-profits rely heavily on volunteers and temporary workers, which can make trusting people with your books more complicated. You may have a rotating carousel of workers at your NFP who are responsible for your reporting. What happens when they depart from their role and the next person doesn’t know where to pick things up?
Outsourcing your bookkeeping gives you a reliable contact who will never abandon your books. And experts are less likely to make a mistake than a part-time staff member who is already overwhelmed.
Risks with mismanaged funds are significant for not-for-profits. A missed audit report or improperly lodged taxes can lead to serious penalties and fines. Outsourced bookkeepers are also impartial. They can do an objective risk assessment and tell you honestly where you need better financial safeguards or reporting in place.
It’s important to keep in mind that financial errors snowball. If you lodge an incorrect 2020 tax return, some of the data on your return for 2021 may also be wrong. A bookkeeper can look over historical documents to make sure you’re not working with erroneous reports. This mitigates your long-term risks as well as correcting your current reports.
Stay compliant with all relevant filings
Your nonprofit may be responsible for a variety of reporting. An outsourced bookkeeper can help you stay up-to-date on all necessary filings. Reports you may be responsible for include:
- ACNC statements. If your not-for-profit charity is registered with the ANCN and has an annual revenue of more than $250,000, you must supply them with annual financial statements. The reporting must be sent within six months of the end of your financial year. NFPs who generate less than $250,000 per year still need to send an Annual Information Statement.
- Constitutional requirements. Most not-for-profits have a constitution which guides the organisation’s rules and regulations. This often includes how often you need to create financial reports and to whom they need to be supplied.
- Local regulator reports. Depending on the state where your nonprofit is located, you may also have to submit financial records to a local regulator. In New South Wales, for instance, you must lodge a Summary of Financial Affairs with NSW Fair Trading. The statement must be submitted within one month of your annual general meeting, or within seven months of the end of your fiscal year.
- Audits. Many not-for-profits are also required to lodge a full audit of their finances to a local entity. In Queensland, your financial statements must be audited by a registered company auditor.
- Reviews. Some small nonprofits may not be required to submit to a full audit, but rather a review. Think of this process as Audit Lite. A certified member of the Chartered Accountants Australia and New Zealand, CPA Australia, or the Institute of Public Accountants will go over your financial statements to test for accuracy and completeness.
The intricacies of a nonprofit’s financial reporting are evolving and complicated. It’s a lot for your staff to handle when they are also tackling other responsibilities. An outsourced bookkeeper who knows a lot about your not-for-profit industry will stay current with your organisation’s legal requirements.
Take advantage of experience and top accounting software
A not-for-profit organisation may not have access to the latest accounting software. It’s understandable for you to spend your precious resources elsewhere. But what happens when the tax codes change or your state alters the required reporting? You may be lost.
A dedicated, outsourced bookkeeper has not only the expertise to understand the needs of a not-for-profit, but also has the newest version of important accounting software. The top accounting tools can make it easier to create and send everything from a balance sheet to accounts payable reports. With an outsourced professional at the helm, your NFP can tap into the newest ways to expedite financial reports and catch mistakes.
Is outsourced bookkeeping right for your organisation?
Is your not-for-profit growing? It may be time to turn over your books to a professional. An outsourced bookkeeper can do everything from record your donations to lodge your annual reviews and audits. You will be kept informed every step of the way without having to put in your own elbow grease.
To find out how bookkeeping professionals can make your organisation run more smoothly, learn about how Visory’s bookkeeping service can help your nonprofit.